WASHINGTON – Members of the Federal Reserve's interest rate-setting panel debated how much to cut rates at their Nov. 6 meeting, before settling on a half-percentage point reduction, according to meeting minutes released on Thursday.
"A number of members noted that the choice between 25 and 50 basis points of easing was a close call,'' the minutes said.
While the vote to ease rates by a half-percentage point was 10 to zero, the disclosure of the debate may add to speculation in financial markets the U.S. central bank is close to ending its cycle of monetary easing. The Fed made a smaller quarter-percentage rate cut at its most recent meeting on Tuesday.
In the minutes for the November meeting, members of the Federal Open Market Committee that favored a smaller cut did so because they felt policy was already "accommodative'' and they were worried that a larger cut would lead markets to "build in inappropriate expectations'' for additional cuts. Those favoring a half-percentage point reduction said there was an absence of evidence the economy was stabilizing in the aftermath of the Sept. 11 attacks on New York City and Washington.
Looking ahead, the FOMC members believed the economy would likely rebound in 2002, the minutes said. However, the strength and timing of that rebound was seen as depending on proposed federal fiscal stimulus, the United States' on-going war against "terrorism'' and economic conditions abroad.